Since early October, the U.S. benchmark for oil prices has been down around 32 percent. Benchmark prices are set by a grade of crude oil called West Texas Intermediate, which hit its lowest price in over a year at just above $50.
Analysts say there’s just too much supply from the U.S., Russia and Saudi Arabia. But there’s also output from Iran, which wasn’t expected with the re-imposed sanctions from the Trump Administration. Despite the sanctions, waivers were extended to several countries allowing them to continue importing Iranian petroleum.
Royalties and taxes from the oil industry account for a significant portion of Wyoming’s revenue. If barrel prices stay low long enough, that could change production levels and how much revenue goes to the state. Major producers in the state like EOG Resources, Anadarko, and Devon Energy have already seen some declines in share prices.
Carl Larry, Refinitiv financial advisor, said there’s no reason for concern quite yet. He said companies usually wait around three months before making changes.
"We’re about seven weeks in. So, we have another five or six here before someone really starts to say we have to stop now, we can’t keep going like this if these prices stay so depressed or have the risk of going lower," Larry said.
OPEC, the Organization of the Petroleum Exporting Countries, meets in Vienna December 6. Larry said OPEC would be able to cut production to increase prices, but there’s no guarantee anything will change.
Jim Ritterbusch, head of Ritterbusch and Associates, an oil consulting firm, said he expects 2019 to be a similarly volatile year with highs around $75/barrel and lows around $50/barrel. $50 is considered the threshold where production is still safely profitable.